Under the proposal, special capital treatment for insurers would be applied to specific activities, such as separate accounts, deferred acquisition costs and insurance underwriting.

Sue Stead, head of the insurance-regulatory practice at Nelson Levine de Luca & Hamilton in New York, says state insurance regulators are aware of the Fed proposals, and are concerned “about the potential impact of federal regulation on how insurers are currently regulated.”

Stead says state and federal regulators are in talks to ensure that the new rules are compatible with the current regulatory structure.

The proposal was published for comment by the Board of Governors of the Federal Reserve System; the Office of the Comptroller of the Currency; and the Federal Deposit Insurance Corporation.

The Federal Reserve previously identified 20 holding companies and constituent thrifts it intends to oversee. They include American International Group, State Farm, Nationwide, Prudential, Northwestern Mutual, Massachusetts Mutual and W.R. Berkley.

But this list of regulated companies is considered a “moving target” by federal regulators and is subject to change because a number of these companies are seeking to change their status in order escape oversight by the Fed as a thrift-holding company.

Robert Benmosche, AIG president and CEO, brought up the issue last Friday during AIG's conference call with analysts to discuss its second quarter results.

He said AIG has made a comprehensive study of how it will be impacted by federal regulation, and that its only concern is whether it should divest itself of its Wilton, Conn.-based thrift.

He acknowledged that AIG “is giving thought to whether we should now close the bank we have because we're concerned about that aspect of it and an insurance company invests very differently than a bank would …”

In the latest proposal, the Fed said it had asked for comment in earlier proposals, and had also met with industry representatives and other regulators.

The Fed said these efforts had yielded concerns about imposing “bank-centric” consolidated capital standards, the need to appropriately address certain instruments and assets unique to savings and loan holding companies, and the need for appropriate transition periods and the degree of regulatory burden.

Moreover, the proposal says, “a number of commenters suggested that the Board defer its oversight of savings and loan holding companies, in part or in whole, to functional regulators or impose the same capital standards required by insurance regulators.”

But the Fed said in the proposal, “The Board believes both of these approaches would be inconsistent with the requirements set out in section 171 of the Dodd-Frank Act.”

The proposal also that “ the [Fed] Board believes it is important to apply consolidated risk-based and leverage capital requirements to insurance-based holding companies because the insurance risk-based capital requirements are not imposed on a consolidated basis and are based on different considerations, such as solvency concerns, rather than broad categories of credit risk.”